The Bank of Japan intervened in the currency markets during the Asian trading session in an effort to curb the Japanese currency’s strength which has been hurting Japan’s exporters. This is the third time this year that Japan has unilaterally intervened in the markets.
The dollar surged to a three-month high against the yen after the intervention. The dollar has recently been weak and under pressure due to increasing speculation about further easing by the Federal Reserve, and thus weakened considerably again the yen, touching new record lows last week.
This concerned the Japanese authorities and Japan finance minister gave repeated warnings of a strong yen and signalled that an intervention would be likely soon.
USDJPY spiked more than 5 percent to as high as 79.51 in a matter of minutes from 75.56.
This is the highest level in three months, since August 5, after hitting another all-time low of 75.56 this morning in Asian trading.
Japanese Finance Minister Jun Azumi confirmed that Japan intervened unilaterally, though he declined to comment on the size of the intervention. He added that the yen’s strength threatens to derail the economy’s recovery from the devastating March earthquake.